Is a Request for Reconsideration Always the Right Answer?

The Department of Labor & Industries (L&I) has an appeal process by which businesses facing a tax assessment can appeal audit findings to an L&I litigation specialist trained to review audit results. The idea behind the Request for Reconsideration process is that it is a relatively informal process that gives L&I a chance to make corrections to audit determinations. While this process is often the preferred course in resolving matters with the agency, it may not always be best appeal option. Here are some factors I take into consideration in deciding where to direct and/or concentrate appeal efforts:

  • Chances of success. Not every audit finding is erroneous. There are times when the auditor gets it right, and going through the recon process may not be worth the hassle and expense, or risk of a worse result.
  • Assigned litigation specialist. Results in the recon process can vary drastically based on the litigation specialist reviewing the case. For example, it is not uncommon for one litigation specialist to conclude – based on the same set of facts – that a business owner qualifies as an exempt independent contractor, when another wouldn’t. Likewise it is not uncommon for one litigation specialist to advocate one interpretation of a key law, when another would advocate another interpretation. Thus, the litigation specialist to whom a matter is assigned is consequential in determining where to direct/concentrate appeal efforts.
  • Need for impartiality. While the recon process is considered an appeal, it is an appeal to L&I itself, and not to an independent body. In the recon process, the litigation specialist is an L&I employee, and thus is beholden to L&I. There are times when the need for impartiality would suggest that you not waste time and money appealing to L&I an employee, but to direct your appeal efforts to Board of Industrial Insurance Appeals (BIIA)—an independent body charged with hearing these appeals.
  • Cost. Cost should always be a significant consideration in deciding whether/where to focus appeal resources. Sometimes the amount of the assessment alone makes it not cost-efficient to appeal, particularly with the assistance an attorney. Other times chances of success at the recon level, the assigned lit spec, and need for an impartial trier of fact (issues discussed above) suggest that resources not be wasted trying to persuade a litigation specialist in the recon process, and instead to proceed directly to the BIIA.

These are just a few of the many considerations to take into account when deciding on appeal options. Consult with an experienced audit attorney when making decisions about your particular situation.


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